Investing is an important factor in our lives and our ability to build wealth, but how do we know if we are investing or gambling? How do we know if we are making the right investment decisions?
Here are 7 basic steps to ensure we make sound investment decisions.
1. Build a coalition: Review your investment decision with at least 5 people that have credibility in the investment space you are considering. Take a moment to build a coalition of experts that have a track record of success in the industry you are seeking to invest.
2. Can you estimate your expected rate of return?: “Investments” are just speculation if you cannot calculate your expected rate of return prior to making the investment. It is crucial to analyze your investment for the expected rate of return before making the investment.
3. Consider the worst case scenario prior to investing: It is extremely difficult to analyze risk in any investment. We cannot see what we don’t know, but considering the worst case scenario prior to investing will help make a sound investment decision.
4. Consider the best case scenario: In addition to taking a moment to consider the worst case scenario, it is also advisable to consider the upside if everything goes your way. This helps you understand the risk-reward ratio.
5. Have multiple exit strategies/back-up plans: It is incredibly important to guard against catastrophic results when you invest. It’s important to make contingency plans if your initial assumptions do not materialize. Having alternative courses of actions on standby will be helpful.
6. Reduce your fees, expenses and taxes: There’s a popular paradigm in the investing world that you make your money going in. The more you can control your expenses, the higher the likelihood of a successful investment. Pay close attention to your expenses.
7. Have a 3 to 10 years horizon: Investing usually takes time to fully mature. Making plans based on a 3 -10 years horizon will help you make better investments decisions.
For more articles like this, please visit my website at www.victorlofinmakin.com/new- blog
At your service,
“Obsessed with Service”
2016 Top 20 Under 40 Realtor
2018 HomeLight Top 5% National Realtor
2019 Top 20 Houston Black Real Estate Association
Academy Property Management
Freedom Capital Group
Easy Continuing Education
NMLS # 1177538
Texas law requires all real estate licensees to give the following link to TREC’s Information about Brokerage Services to all prospective clients.